Now banks can enjoy increased flexibility in shifting or closing of urban branches as The Reserve Bank of India has waived regulatory approvals. Shifting the metropolitan, urban or semi urban branches outside the state does not require approval of RBI. However, rural and sole-urban branches, will still require prior permission.
It is the duty of the banks to inform their customers before they plan to shift/close/merge the branch.
As per a notification by the central bank, merging, shifting or closing of any branch is under the sole discretion of the bank except for rural branches and sole semi-urban branches that require approval from the District Consultative Committee or the District-Level Review Committee.
Banks will need to check if the banking needs of the centre are being met through mobile vans, business correspondents or satellite offices, when closing/shifting or merging sole rural or semi urban branches. Also, banks should move branch offices within an area with same or lesser population category. Banks can also opt for part-shifting if space and rent pose constraints. But it should be restricted within 1 kilometer of the existing location. In such a scenario, banks would not be allowed to maintain banking activities, such as deposit or loan business, at both the locations. Government business can also be moved to a different branch at the bank’s discretion and does not require RBI’s approval.
Wherever a bank is the principal banker or has a NOC from the principal banker, it can open extension counters in premises of those institutions.